Netflix Executives Pleased With Results of Password Sharing Rules in Canada, More Details Revealed
Netflix released its quarterly earnings report with analysts and investors on Tuesday, and as The Streamable predicted the company used the occasion to make some news regarding its plans to halt password sharing amongst its users. In a letter to shareholders, the company confirmed that rules to stop password sharing would be introduced in the United States sometime during the second quarter of this year.
More details about the plan were revealed during the subsequent earnings call as well. Netflix co-CEO Greg Peters was asked if the results for anti-password sharing measures in Canada, which were introduced in early February, have led to the subscriber and revenue results that the company had hoped to see.
Peters was indeed enthusiastic, especially considering how different the Canadian market is from the Latin American countries that were the first to endure Netflix’s password sharing crackdown.
“It was a strong validation to see consistent results in these new countries because there are different market characteristics, different from each other and also different from the original Latin American rollout countries,” Peters said. “So to get to a positive outcome, you mentioned Canada, we’re now in a positive member and positive revenue position relative to pre-rollout. So that’s a really strong confirmation that we’ve got an approach that we can apply in many different countries with different market characteristics, including our largest revenue countries.”
Netflix took a bit of extra time to gather data from the Canadian market, which it feels is more similar to the United States in terms of consumer behavior and income levels than Latin America. There was, unsurprisingly, a large number of Canadian users who canceled their service in response to the new rules, but Netflix was pleased enough by the bounce back that it saw that it is now ready to move forward in other markets, including the U.S.
Peters also explained that customer choice was still important to the company, which is why it will give users the option to pay to add another viewer to their current accounts instead of simply forcing the sharer to get an account of their own.
“What we’re trying to do is create a structure that really supports choice,” he said. “So that gives an opportunity for folks to spin off to borrower accounts where they think that’s the right solution for them or for use cases, which are legitimate use cases, where somebody wants to basically buy Netflix for a family member or something like that, we want that extra member to be in place, too. So we don’t really have, I’d say, a strong preference. We’re not trying to steer in one perspective other than using pricing to both satisfy those customer choice goals as well as thinking about long-term revenue optimization.”
The co-CEO did not specifically reveal how much it would cost to add a user to an account, but he did offer a hint. Peters said that Netflix would use its most recent rollouts as a guide, and since it costs $7.99 CAD to add a user to a Standard plan (which runs $16.49 CAD per month), American subscribers should expect to pay between $5-$8 if they want to add a user outside their home to their account.
Finally, Netflix revealed that the U.S. was not the only global territory that would see the new rules introduced this quarter. Peters said that users should expect “a very broad launch,” and that the vast majority of the 190 territories where rules against account sharing aren’t already in place will see them implemented at the same time.
The company has done its due diligence, and despite surveys that have warned that 35% of U.S. customers could cancel their service if rules against password sharing go into effect, it appears to be full steam ahead for Netflix. The world’s largest streamer stands to gain up to $3.5 billion by cracking down on password sharing, and that kind of revenue is too enticing to simply leave on the table.
Netflix
Netflix is a subscription video streaming service that includes on-demand access to 3,000+ movies, 2,000+ TV Shows, and Netflix Originals like Stranger Things, Squid Game, The Crown, Tiger King, and Bridgerton. They are constantly adding new shows and movies. Some of their Academy Award-winning exclusives include Roma, Marriage Story, Mank, and Ma Rainey’s Black Bottom.